It determines the fixed income an investor receives periodically – typically semiannually or annually – until the bond matures. The coupon rate is set when the bond is issued and remains constant throughout the bond's life, reflecting the prevailing market interest rates and the issuer's credit risk at the time of issuance.

For example, if you have a 10-year, EUR 2,000 bond with a coupon rate of 10 percent, you will receive EUR 200 per year for 10 years, regardless of fluctuations in the bond's market price. As market interest rates change over time, they may move higher or lower than the bond's coupon rate, affecting the bond's market value: a rise in market interest rates typically decreases the bond's value, while a decline increases it.

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